Optimism for Tech Startups Despite Competition from Large Rivals

For anyone thinking small internet tech companies don’t stand much of a chance against the big guys, here’s an article by Shuli Ren, one of our experts at Dow Jones Banking Intelligence, which sounds a note of optimism for smaller fish in the fiercely competitive tech pond. What follows is a taster of her article, though if you’re interested in reading the full piece, please do log on and register at DJBI, which is a subscription only service.

A standalone consumer internet tech company’s biggest nightmare–and a major hurdle to its valuation–is that one of the four titans, Apple GoogleFacebook and Amazon.com, wades in and kills small rivals in the quest for growth.

The failing performance of Poke, a new private message app launched by Facebook in time for the holidays, however, has alleviated that fear to a certain extent. Branching into new verticals organically for the aforementioned blue-chips does not, it seems, always work.

When Facebook launched Poke (its own version of the Snapchat app) right before Christmas, it took the app world by storm, ranking top on the Apple free-app chart. Now, not even two weeks later, Poke ranks at #169. Meanwhile, Snapchat, the small fish that feared for its life, remains a popular top-five app.

There are other examples. Google never caught up with Facebook, the running joke being that Google+ is a circle that only Google employees frequent. Apple is not always a magician either. Its new map app, aimed to snatch off Google’s mobile local search traffic, was such a flop that Apple’s CEO Tim Cook publicly apologized. When Google re-launched an iPhone map app last month, it was downloaded over ten million times in two days.

What this means is that certain seemingly expensive acquisitions are justified. In April, Facebook paid $1 billion for Instagram, a popular photo-sharing app that had not started monetizing. Instagram is turning out to be a good bet, and has become a viable substitute to Twitter, Inc. In August, it exceeded Twitter in daily active users for the first time. Users also spend more time on Instagram, averaging 321 minutes in November versus 146 minutes on Twitter, according to comScore.

There are other good assets Pandora Media ($1.6 billion market cap) and TripAdvisor ($6 billion) are on our mind.

Comments (2 of 2)

@Anonymous, explain why Apple released iPad 4, way before its usual launch season (Q1/Q2 2013), with "almost" nothing new to brag about?

12:02 pm January 2, 2013

Anonymous wrote:

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AAPL CEO TIM COOK WAS WAITING ON ALL THE TAX SELLING BEFORE AUTHORIZING THE BUYBACK!

I BELIEVE AAPL WILL RALLY 1OO POINTS IN THE NEXT 7 DAYS. THIS STOCK IS TOO CHEAP AND THEY ARE SOLD OUT OF IPAD MINI'S IN CHINA AND HONG KONG; AND ALSO MANY STORES IN THE U.S.A. IPHONE 5 SALES ARE STILL STRONG, AND THE SCARE TACTICS BY CNBC WITH THEIR REPORTERS STATING AAPL WAS CUTTING PRODUCTION /ORDERS FOR IPHONE5 BECAUSE SAKLES WERE WEAK HAVE BEEN PROVEN "FALSE", AS APPLE ARTICLES PROVED TODAY THAT APPLE IPHONE 6 ALREADY STARTING TO BE DEVELOPED . BUY AAPL NOW

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